Ever wondered how credit bureaus can provide accurate predictions of credit risk using only data on past payment history? The answer is that they can’t. This results in increased defaults and lenders excluding potentially good borrowers from their books because they can’t distinguish them reliably from borrowers that are likely to default.

Enter Nordigen. They help lenders use transaction data as an additional source for credit scoring data by turning transactions into predictive risk scores. This allows lenders to significantly improve the quality of credit scoring models and increase approval rates without increasing risk. Data from bank transactions offers much richer information on the financial habits of an individual or a small business and, when combined with traditional credit data, can decrease bad credit losses by 6–23%. Nordigen applies sophisticated machine learning models and their extensive experience in identifying and structuring data to reach a categorization rate of 95% of all risk-critical transactions. Employees in credit departments can spend up to half an hour or more to analyze a transaction statement manually and still not reach the kind of accuracy and understanding that Nordigen can provide in seconds.

I met the two founders of Nordigen, Rolands and Roberts, back in 2015 soon after they had started the business out of TechHub Riga’s co-working space. Their passion, knowledge and energy was immediately apparent. They asked good, hard questions, listened to advice and have made great progress ever since. I introduced them to their first larger bank client and saw that relationship flourish and grow. Now they meet with potential customers and simply lay down a challenge: Nordigen will prove with real customer data that their solution will result in better credit decisions and improved profits. When the team let us know it was our last chance to invest, we jumped on it.

Looking forward, we see a very bright future ahead. Nordigen is available in 12 countries today — the three Baltic states, Finland, Poland, Spain, Sweden, Germany, Czech Republic, Denmark, Australia and New Zealand — which still leaves many large markets open for expansion in the European Union and elsewhere. They already serve over 30 customers in their existing markets. The forthcoming PSD2 directive will force banks to release bank transaction data to consumers so that it can be used by third parties. This will open up opportunities for new entrants in the lending business, sharpen competition between the existing banks and make the sharing of transaction data for credit scoring much easier.

If you work for a bank or non-bank lender which seeks to lower the default rates, be sure to check out Nordigen — their service will pay off very quickly: www.nordigen.com.